innRoad Raises $5.8M to Usher in the Future of Online Hotel Management

Southampton, NY-based innRoad just announced a $5.8 million Series B round of funding, led by Blue Heron Capital and Rose Park Advisors. The hotel management SaaS provider has racked up considerable growth since its debut in 2008, and plans to use the new injection of capital to help it continue to deliver its hospitality back office products specifically targeted at independent hoteliers, as well as usher in the next generation of online reservations. Currently, over 350 indepdendent hotels have signed up to use innRoad’s platform.

In an interview with BetaKit, innRoad founder and CEO Murat Ozsu explained that the money will be put towards building out the startup’s sales team, which until now has been pretty much nonexistent.

“Essentially our complete outreach has been pay-per-click ads and us picking up the phone,” he said. “We’ve almost never met a customer, we haven’t really had any targeted sales campaigns, and now we’re going to build a sales force to do outreach, and really scale the sales organization. Ahead of that, we need to scale our delivery organization.” Ozsu said the company has so far been having trouble just keeping up with demand, hence the need to work on delivery before expanding their sales efforts.

The innRoad model provides small hotel owners with centralized online tools to help them manage their business. The concept differs from other online reservations and hotel management platforms, according to Ozsu. “Everyone is sort of stuck in these categories that the industry has placed around them, like PMS system, booking engine and central reservations, but we’ve never come at it from that perspective,” he said. “We’ve always come at it from the angle that those categories do not make sense.”

By contrast, innRoad is keen to make sure that hotels can use it to maintain full control over every aspect of the process, from booking, to marketing, to online reputation management. A key shift in the hotel industry, Ozsu notes, is that customers are increasingly looking at each other’s recommendations as the true test of whether or not a place is worth booking; the days of trusting in brands just by virtue of their word-of-mouth reputation is long gone. People turn to online sources like TripAdvisor to check reviews of specific establishments, and that presents a huge opportunity for small business owners to come out ahead in comparisons with even the biggest hospitality chains.

“Whereas the last ten years on the internet helped the [big hotel chains and franchisees], the real dynamic in the industry today is that the leverage has turned.,” he said. “The brands, and their reputation matters less now than the reputation of the person making the booking. If you stayed at a hotel, your network values what you think about that hotel more than the brand of the hotel, and that’s what causing the tipping point for independent hotels to leverage.”

On the product side, Ozsu said that the funding will help innRoad accelerate its offerings on that side of the equation, which will help hoteliers connect directly with potential guests, something that provides long-term financial benefits over dealing with online intermediaries like Expedia and others. That’s also a key difference that sets innRoad apart from other hospitality management software like Frontdesk Anywhere, Hotelogix, Micros and PAR.

innRoad offers a lot of value to small hotels looking to get the tools they need to compete with bigger players, but the startup’s biggest challenge will be in helping businesses move the discussion around bookings from large aggregators to individual venue sites. Still, the all-in-one approach that’s designed to work with the setups already in place at these businesses is probably the best way to go about getting a number of disparate businesses all on board a single platform.